Peter Hodson Superior Plus Corp SPB-T COMMENT Nov 18, 2024

Considered a utility. Q2 missed. Her analysts have it as a Hold, concerns over company's outlook. On the sidelines till more visibility on earnings growth and a change in momentum. 7/10 on value. She prefers FTS, for example. 

Valuation probably attractive enough to add now as a value play. Seasonally, expects demand to improve. That being said, have to be careful of the high yield, as it can disappear. Can't say dividend is rock-solid. Yield is 9.5%, some risk.

Never impressed with it. Needs to evaluate it more on the current pullback. Not an investment, but a trade at best.

SPB has been very disappointing. It has a shareholder yield of 16% (11% dividend yield, 4.4% debt paydown, and a 0.5% buyback yield). Analyst estimates have largely been trending lower, but forward earnings growth is expected to be strong, but some of this is reflected in its forward earnings multiple of 17X. It is a cyclical business, and we will be watching the earnings release next week very closely to further assess at that time our full review of the company going forward. 
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Disappointing. Brookfield owns a lot of this, and he thinks they see a recovery coming. Shares are down because they are paying off a recent acquisition. Stay the course but watch the next few quarters.

He's looking for a good entry point. Cut dividend, which was long overdue. Now looking at more share buybacks, a good thing. Valuation is really attractive. Strong fundamentals going forward. Not a dividend play, but a good opportunity for growth. Yield is 3%.

The shareholder base has probably rotated by now away from yield investors. The problem is that it has high debt and a high valuation, yet growth is not that great. Weather is also a factor and competition has increased somewhat. Yes, EPS is expected to show good growth in 2025, but even with a good bounce EPS will be lower than it was in 2013. We think management did the right thing with the dividend, but we still think buyers can wait here. 
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Watch this because shares have fallen far and Brookfield is involved with them in a serious way. Watch their next two quarterly reports.

Strategy was to get bigger in Canada and US propane distribution, and he liked that. Didn't like the payout ratio of 80-90%. Certarus acquisition wise. Balance sheet couldn't support all its big plans. Dividend cut a positive, and should free up capital.

Widespread team turnover since the acquisition, so it'll take him some time to get familiar with new management. Some reasons to be optimistic.